For most people, holiday spending is a straight shot to financial disaster. Aside from not setting budgets, the number one problem is the method being used for purchases. Whereas the use of cash or a debit card takes away from a person’s immediate disposable income, credit card work in the opposite way.

The lure of getting something now in exchange for delaying to pay in full is also too often a fatal attraction. The credit card formula would not be complete without that special term known all over the world as interest.

Sure, swiping plastic through a machine is extremely easy, but so too is maxing out your balance. Millions of consumers get into trouble with running high utilization rates (IE the amount of credit used vs. the amount available) during the holiday season, a problem that has been exacerbated by events such as Black Friday and Cyber Monday.

Depending on your credit card(s) specific APR, those savings you got initially could be long gone within a few months. Smart, sound financial planning is the only way to prevent unmanageable debt loads.

Tis’ the season to steer clear of credit woes

Retail chains are famous for approving consumers for store-specific cards in droves; even if you have a poor credit history, your chances of walking out the door with more plastic in your wallet are very high.

The kicker? Extraordinarily high interest rates (think in the area of 20-30%) and annual/late payment fees. When in doubt, always follow the cardinal rule of personal finance, which is to never buy what you cannot afford to pay for in cash. Chances are if the only credit card you can get is through a retailer, you shouldn’t be applying in the first place.

Another thing worth noting is the impact credit inquiries have on your score and record; every time you apply, it will appear here, even if you get denied. Too many inquiries in a short period can negatively affect your credit, so limit your number of applications. In the same vein, cash advances might as well be deemed the ultimate credit trap; usually carrying APRs that far exceed normal rates, making routine ATM withdrawals the fast track to compounding debt.

Regardless of your financial position, make a budget and stick to it. Credit is a great thing when used wisely, but like anything must be approached with caution and care. The season of giving should never put you in dire economic straits.